Free To Abuse Some More


Why do people do what they do? An old question that keeps on moving always, as introspection gets ever more refined.

Krugman feels that Republicans want poor children to go hungry because they are meanspirited (the Republicans, according to Krugman, and the children’s parents, according to some Republicans). However, there is a more sinister explanation: we are all been conditioned. Stealing from the mouths of children is not just a passion, it’s training for greater marvels to come.

Paul Krugman reminds us in “Free To Be Hungry” of “the war on food stamps, which House Republicans have just voted to cut sharply even while voting to increase farm subsidies.”

The food stamp program’s proper name, is the Supplemental Nutritional Assistance Program (SNAP). In his editorial Krugman recognizes that:

“But, say the usual suspects, the recession ended in 2009. Why hasn’t recovery brought the SNAP rolls down? The answer is, while the recession did indeed officially end in 2009, what we’ve had since then is a recovery of, by and for a small number of people at the top of the income distribution, with none of the gains trickling down to the less fortunate. Adjusted for inflation, the income of the top 1 percent rose 31 percent from 2009 to 2012, but the real income of the bottom 40 percent actually fell 6 percent. Why should food stamp usage have gone down?

I am going to say more shortly about that recession which never ends. SNAP goes mostly to children, or families with children. Krugman concludes that:

SNAP, in short, is public policy at its best. It not only helps those in need; it helps them help themselves. And it has done yeoman work in the economic crisis, mitigating suffering and protecting jobs at a time when all too many policy makers seem determined to do the opposite. So it tells you something that conservatives have singled out this of all programs for special ire.

Even some conservative pundits worry that the war on food stamps, especially combined with the vote to increase farm subsidies, is bad for the G.O.P., because it makes Republicans look like meanspirited class warriors. Indeed it does. And that’s because they are.”

Here is a variation of my comment that Krugman posted right away (I am writing a scathing critique of a fellow NYT editorialist’s love-for-billionaires; that will come later):

Properly measured, what we are going through is a Greater Depression, nothing less. GDP measures how well fracking and the hyper rich, and the financial sector, are doing. They are doing great. However, as the later two are not too invested in the real economy, their fortune has no impact on normal people. 

If one measures it according to employment, especially valuable employment and according to median income, this is an unprecedented downturn.

Some will say: OK for the USA, but what of Ms. Merkel’s wonderful Germany? Are not things looking up there?

Well, contrarily to the pundits’ sing-song, the situation in Germany is actually terrible, arguably the worst in Europe: the demographics are atrocious, the state of education is abominable (especially in light of what Germany used to be), and, finally, selling luxury cars to China is going to work splendidly for, just, another four years, or so (after which time the Chinese will long have learned to drive on… the Moon, and may feel they can build luxury cars on Earth too; don’t laugh, especially if German, or, in general, European).

Hopefully a grand coalition with the German Socialists will orient Europe’s out of Merkel’s snail-vision policies (aggravated by Socialist Hollande next door, who is also playing, one toy at a time).

Obama’s capitulation to Assad and general pusillanimity does not help, as it further the timidity of the spirit. The West is sinking, 1938 style. But there is worse; at least in 1938 (but for France), the economies of the West had mostly recovered.

Here now the recovery systems are themselves exhausted: we can’t lower interest rates, and augment deficit spending wildly, and no plans are in place to lift the economy.

How did we get there? By design. By plutocracy unchained. Starving the People, teaching the less fortunate, and most innocent, of the People to go hungry, is just part of the plot. Once they get used to the abuse, and proud to have survived it, the People will be ready for more. And thus more will come their way. 

It does not look like it, but the party of plutocracy unchained is craftier than it looks. Sometimes, the more brutal, the smarter. All forgers know this. One has to beat the iron when it’s hot, and malleable, just as one has to beat the People when it’s dispirited and confused. In the end the People could well not just tolerate the meanness, but want it some more.

Patrice Ayme


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14 Responses to “Free To Abuse Some More”

  1. EugenR Says:

    Dear Patrice, let me please to give a different view point on the world economy.
    The modern obsession of all the economists for economic grow in terms of GDP increase is a false perception. Of course it is caused by addictive need to pay to lenders real term interest and to investors real term yield (profit on their investments). This makes the economic growth a need without consideration if economic growth has positive or negative impact on the welfare being of the majority of the population. This concept on the long run inevitable enriches the wealthy property owners, whose income is based on property possession.
    The whole economy is based on false assumption that increased consumerism is necessary for economic growth and is the best way to sustain healthy economy. The inevitable result of this concept is the ever present nuisance called advertisement. Army of salesmen, marketing experts, public relation experts chase you in every corner of your existence, yet if you have a real need to buy a product, there is no-one to ask for advise, and probably instead of what you need the army of seducers will try to seduce you with alternatives you don’t want. And above all stands the cost effectively devastatingly wasteful urban solution of suburb dwellings, with malls and traffic solution based on private cars trying to feel freedom of movement while standing in endless queues to and from the work or to and from the weekend vacation.
    Is this system about bringing welfare and well-being to most of the human spices? I doubt it. It is a system of selling illusion of “wealth and happiness”, while trapping most of the human spices in delusion of gatherers, who take possession of mostly worthless artifacts, and pay high price of enslavement to debts. This system is not only about the wealthy with possessions and those without it, but about those, who are aware of the realities of the system, and as outsiders can benefit from it, and those who are sunken in the system up to their neck and have no escape out of it.

    • Patrice Ayme Says:

      dear Eugen: I agree with you, and tried to make that clear.

      The UN (with Sen, etc.) created the Human Development Index (HDI). France was the highest HDI large country (the USA just behind)… Although I do have lots of problem with the HDI (Iceland was number one, that’s a bad joke: it’s not really a country, being ridiculously small in population, and because for me country means military muscle (France, UK, USA, Russia, China, India) or potential military muscle (Japan, Germany), or idiosyncratic civilization (Vietnam, Arabia, Senegal, Mexico, Egypt, Peru, Bolivia, Mongolia, Kazakstan), or bigness (Brazil, Indonesia), or economic muscle (South Africa, Canada, Australia)

      Anyway I have problems with GDP, HDI, so I consider median income and employment (NOT UNemployment)…

  2. pshakkottai Says:

    Europe should become monetarily sovereign and create enough money to support all nations in Europe. It must eliminate plutocracy in banking. The best way is by fiat.
    India has achieved this with uniting all its states. France and Germany can start this process. The first thing to is to get rid of Goldman Sachs.

    • Patrice Ayme Says:

      Dear Partha: What’s happening in banking and monetary creation, much of it, I cannot fathom. What’s the end game of QE in the USA? OK, so much of the “help” to Greece was helping Greece pay foreign banks (many German and French, but some also British…). OK, the good side of that has been to try to teach the Greeks to have a state-of-law economy, a bit more than henceforth…

      Merkel is very klar about teaching Southern Europe the proper ways of behaving, and the debt crisis is the Trojan Horse for that. However, medium term, Germany is in a very bad place. And, anyway, not to klar what Germany wants to teach. Certainly it cannot crow of its educational/research system.

      Meanwhile France is cruising towards 100% debt/GDP in 2014. If France falters, Germany is torpedoed, short term (instead of medium term). France is reforming civil servants not as fast as she should, otherwise is moving back to some Colbertism (good).

      ECB’s Dragghi just mumbled he wanted more money in the system.

      The SPD is negotiating with Merkel (she HAS to!) about what governing Germany/Europe is going to be about. They may want easier money. The negotiations are expected to last weeks…

      Getting rid of Goldman Sachs? You mean Dragghi? ;-)! I don’t think that’s in the cards.

      India was already united, de facto under the British Raj. Last time Europe was really united (sans Britannia) was in the heydays of the Carolingians… However, one could argue, and I will, that all national states are illegal (as they all descend from the Roman empire and its immediate descendant, the RENOVATED Roman empire)

      • pshakkottai Says:

        Dear Patrice:
        Rather than adding dollars to the economy, QE reduces the supply of dollars.
        The facts: QE is a FRAUD. It is not a powerful weapon against recession. It is not a weapon at all. If anything, QE has a negative influence on the economy.

        1. The people are led to believe the Fed is struggling heroically to stimulate the economy.
        2. The wrongly maligned deficit is not affected.
        3. And of course, the gap between the rich and the rest is widened.
        For the President, the Congress, the media and the mainstream economists, all bought-and-paid-for by the upper 1% income group, it’s the perfect ploy.

        QE is, indeed, for dummies.

        • Patrice Ayme Says:

          Dear Partha: You are the first person I read who dares to say that QE is a fraud. I am impressed. Krugman has probably a QE shrine at home…

          I have said many times that QE made the big banks richer and more powerful. After all, it consists into buying bonds from them at inflated prices as if there would never be any inflation (that’s where Krugman contradicts himslef, because, following the likes of me (?) he now claims he wants inflation….)

          Anyway, very good. I think lots of fiat money sort of created by QE sinks in derivatives, to boot, hence leaving the real economy high and dry…

    • EugenR Says:

      As Patrice said India was united by the British and by the way China by Genghis Khan.

      As to fiat money, it is a dangerous game. After all you can’t seriously believe that when unlimited amount of money is thrown to the economy it will not cause degradation of the currency. The price of any marketable item is fixed by its relative scarcity (and not by its essence, enough to compare diamonds to food.). The same is with money, its value is relative to its relative scarcity. If abundant its value will decrease, or in other words the prices will go up. This means in economic jargon inflation. You probably never lived in an economy with hundreds of percent of inflation. I did and it was devastating viz cite from my book in chapter 3;

      …At times of Inflation economists have their hands full creating two price index systems to monitor economic processes and data, i.e. the real price system and the nominal price system. Nominal prices are the prices for which the shops sell their Products, whereas real -term prices are prices recalculated according to some anchor, which is either a foreign currency or some historical price level. The economist needs the real term prices to try to figure out what is really going on in the economy, and the merchants and producers need them to calculate prices relative to other prices.

      The process of Inflation usually starts with a general increase in prices, which after a while prompts the unions to complain that wages are ceasing to cover the daily expenses of employees. Then pensioners and the other sectors of society that live on social security payments start to protest. Last but not least the banks react, by increasing interest rates to keep them above the level of the price increase level.

      …Then, as production costs rise, the exporters complain that their competitiveness against other producers from other countries has been damaged and they will have to lay off some of the workforce unless a compensatory adjustment is made. It is also common knowledge that without exports no foreign currency will be available to purchase the import commodities necessary for the economy. So the currency is devalued. But then all the imported goods that have to be bought for foreign currency become more expensive and the round of price increases starts all over again.

      Because the different segments of the production chain have lost confidence in the stability of the price system, the new round of price increase will necessarily be higher than the previous one. As expectations of further price increase among the people mount, everybody wants to be compensated not only for the last price increase, but also for the expected next price increase, which they believe will be higher than the last one. To secure their position, all the participants in the society ask for exaggerated price and wage increases. By this stage the price increase is gathering extra momentum and is driven by expectations rather than by realities. And the expectations tend to be self-fulfilling.

      And so as the spiral winds ever upwards, first the employers and the employees and last the institutions of social benefits like social security, pension funds etc., create a system of indexation based on an agreed anchor for prices, wages, tariffs, fees, charges, expenses, fares, premiums, rates, tolls, whatever…

      At first the indexed raises occur every quarter, but then they happen every month and at the end every week. Theoretically everybody – the employees, the pensioners, the exporters and even the producers – should get proportionately the same progressive increases in income, but that does not happen in practice because it is impossible for people to keep their bearings in the avalanche of numbers. Those with a strong negotiating position get more and the others get less. Some economic entities even cease to exist, either because they lack the means to cope with the frequent price increase, or because they just don’t understand what is going on around them.

      At a certain stage the prices start to rocket exponentially, and this stage is called Hyperinflation. In Hyperinflation the prices change daily until nobody has any remaining sense of the relative value of products, for Money has lost its major function as the supreme measurer of the value of Product price. During hyperinflation if you ask someone how much a loaf of bread costs he will probably just shrug, or if he is more polite he will tell you the price in a foreign currency. This is the stage at which the market starts looking for an anchor for measuring prices other than the local currency. Usually the anchor is a stable foreign currency, for example the dollar, or some other form of indexation.

      • pshakkottai Says:

        Dear Eugen: Fiat money is not dangerous. It works like this.
        My analysis: Fiat money is a token that changes hands to make transactions more convenient than barter.

        Initial state of the economy: Idle capacity, available workers , available resources both inside and outside the nation. By work I mean all work, physical, academic, intellectual, artistic…

        Final state: workers employed for many years, resources processed both inside and outside the nation. All workers paid, the bridge or dam or whatever built. USA has a new resource.

        Money spent: project funded by fiat money has made prosperity possible and everybody gained including exporters to USA.

        Who lost? Nobody. National debt is also fiat money that USA owes to itself and has to do nothing to pay it back. It is simply a record of all transactions.

        In this example it is seen clearly that money is not wealth. You can’t do any of this in the Sahara desert because resources are scarce. You can do things if there are resources and humans willing to work. The nation should fund all infrastructure because the nation will be stronger.

        Then how to we grow the economy starting from today?
        Increase spending to set a reasonable deficit, say, Deficit1 =Net imports + 5% GDP
        See how employment picks up
        The deficit falls to Deficit2
        Increase spending again
        Wait another quarter to see if Deficit falls again
        Repeat until full employment occurs
        Now watch for inflation and if it picks increase interest rates.

        • EugenR Says:

          Dear Pshakkottai, i have do disappoint you, unlimited fiat money printing is solution for some problems in certain circumstances, but definitely not a solution for every problem in every circumstances. (by the way the QE is exactly Fiat money printing). When all the resources are not fully utilized in the economy it can have positive effect, but only on the short term. It is enough that one essential resource (energy for example) out of many is limited and printing new fiat money will cause only damage and no economic growth . Then other problem is the long term problem. If for long term to much fiat money is distributed to the population, what way it can be done? It can’t be by investing indefinitely in new projects, because in certain stage the investments will be more damaging than useful with low or negative yield (white elephant projects). So the solution will probably be allowance payments without expecting any repayment back to the society. Such policy will have deep negative impact on functioning of the society. This is what is happening in some European countries. If in Greece and Spain you have 50% unemployment of the youth until age 25 it is not just because there are no jobs on the market. On the long run this phenomenon of unemployment is not just a economic phenomena, but also sociological. It destroys the feeling of duty towards society and towards personal needs of the individual.
          The other negative impact of fiat money is the necessary unregulated wealth allocation. Usually, the rich are getting richer and the poor are getting poorer at times of excessive fiat money printing and money value degradation that follows it. If fiat money printing becomes the major tool to finance government activities, as you suggest, it will be followed by government take over of bigger and bigger chalks of the economy. But it is well known the government is a very ineffective product and service supplier. Again the economy will go into waste of resources, and will stop to grow. This is what happened in USSR and other “socialistic” countries before it collapsed.

          I could continue so, pages and pages, but enough of it. All i have to say is that there is no magic wand in economy called Fiat Money, after all someone do have to produce the products, that the magic Fiat Money will be exchanged for it. But why would anybody work and produce if he can live from Fiat Money distributed freely? This i call a logical paradox.

      • Patrice Ayme Says:

        Dear Eugen: excellent point about China. It was indeed divided in two, and Genghis Khan died (from natural causes) during the offensive towards the Song, the Southern Chinese empire (the Mongol offensive would go all the way to Indonesia, BTW…)

        About fiat money, I would just say this: there ought to be enough money to operate the economy (not obvious and something both Rome and China has very severe, society terminating, problems with…).

        True the Yuan had a severe problem with the paper money (invented 7 centuries earlier under the Tang dynasty). Yet, arguably China was doing better than when it closed itself up under the Ming…

  3. Fiat Money | EugenR Lowy עוגן רודן Says:

    […] Says: September 24, 2013 at 3:06 pm | […]

  4. Patrice Ayme Says:

    Dear Eugen and Partha: The economy ought to be about energy, that is, work. Money is just something to facilitate that, but is not necessary. See Rome after Diocletian, or the Inca empire, or Stalin’s USSR, etc…

    The best contemporary example of that is the construction of the Chinese High Speed Rail… By FIAT!

    • pshakkottai Says:

      Dear Patrice: More info on work and fiat money , a contemporary example.

      Delhi Metro is being built and operated by the Delhi Metro Rail Corporation Limited (DMRC), a state-owned company with equal equity participation from Government of India and Government of National Capital Territory of Delhi. However, the organisation is under administrative control of Ministry of Urban Development, Government of India. Besides construction and operation of Delhi metro, DMRC is also involved in the planning and implementation of metro rail, monorail and high-speed rail projects in India and providing consultancy services to other metro projects in the country as well as abroad. The Delhi Metro project was spearheaded by Padma Vibhushan E. Sreedharan, the Managing Director of DMRC and popularly known as the “Metro Man” of India. He famously resigned from DMRC, taking moral responsibility for a metro bridge collapse which took five lives. Sreedharan was awarded with the prestigious Legion of Honour by the French Government for his contribution to Delhi Metro.
      Metros are being planned for all cities in India and are in various stages of construction.



      • Patrice Ayme Says:

        Dear Partha: As I say world economic experts paid by world economic organizations to be so, are of the opinion that, according to calculations, the non crash of the Chinese economy is entirely attributable to High Speed Rail, and the augmentation of AWE (Absolute Worth Energy to use MY terminology) it led to. Chinese HSR is connected to extensive metro systems in all cities it deserves.

        This, BTW, is a system that is duplicable everywhere. even in the USA, if HSR existed between Los Angeles and New York, people would use that instead of the miserable air travel…I wonder how far is India to implementing it…

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